UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Kewaunee Scientific Corporation
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(Name of Registrant as Specified In Its Charter)
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KEWAUNEE SCIENTIFIC CORPORATION
2700 West Front Street
Statesville, North Carolina 28677-2927
ELI MANCHESTER, JR.Eli Manchester, Jr.
President and
Chief Executive Officer
July 31, 199625, 1997
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
of Kewaunee Scientific Corporation (the "Company"), which will be held on the
37th floor at Harris Trust & Savings Bank, 111 West Monroe Street, Chicago,
Illinois, on August 28, 1996,27, 1997, at 10:00 A.M. Central Daylight Time.
At the meeting, management will review with you the Company's past
year's performance and the major developments which occurred during the year.
There will be an opportunity for stockholders to ask questions about the Company
and its operations. We hope you will be able to join us.
To assure that your shares are represented at the meeting, please
vote, sign and return the enclosed proxy card as soon as possible. The proxy is
revocable and will not affect your right to vote in person if you are able to
attend the meeting.
The Company's 19961997 Annual Report to Stockholders is enclosed.
Sincerely yours,
/s/ Eli Manchester, Jr.
KEWAUNEE SCIENTIFIC CORPORATION
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on
August 28, 199627, 1997
The Annual Meeting of Stockholders of Kewaunee Scientific Corporation
will be held on the 37th floor at Harris Trust & Savings Bank, 111 West Monroe
Street, Chicago, Illinois, on August 28, 1996,27, 1997, at 10:00 A.M. Central Daylight
Time, for the purpose of considering and acting upon the following:
(1) To elect threetwo Class III directors;
(2) To approve an amendment to the Company's 1991 Key Employee Stock
Option Plan to increase the number of shares of Common Stock authorized for
issuance over the term of the Plan from 130,000 to 230,000 shares; and
(3) To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on July 12, 199611, 1997 will
be entitled to vote at the meeting. A list of stockholders will be available for
examination by any stockholder for any purpose germane to the meeting, during
normal business hours, at the offices of Bell, Boyd & Lloyd, 70 West Madison
Street, Chicago, Illinois, for a period of 10 days prior to the meeting.
It is important that your shares be represented at the meeting
regardless of the size of your holdings. Whether or not you intend to be present
at the meeting in person, we urge you to mark, date and sign the enclosed proxy
and return it in the envelope provided for that purpose, which does not require
postage if mailed in the United States.
D. MICHAEL PARKER
Secretary
July 31, 199625, 1997
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YOUR VOTE IS IMPORTANT
Please vote, sign and date the enclosed proxy and return it
promptly in the enclosed envelope.
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
KEWAUNEE SCIENTIFIC CORPORATION
Statesville, North Carolina 28677-2927
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Kewaunee
Scientific Corporation (the "Company") for use at the annual meeting of
stockholders of the Company to be held on the 37th floor of Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois, on August 28, 1996,27, 1997, at
10:00 A.M. Central Daylight Time, and at any postponements or adjournments
thereof. Proxies properly executed and returned in a timely manner will be
voted at the meeting in accordance with the directions noted thereon. If no
direction is indicated, proxies will be voted for the election of the nominees
named herein as directors, for approval of the amendment to the Company's 1991
Key Employee Stock Option Plan (the "Plan"), and on other matters presented for a vote in
accordance with the judgment of the persons acting under the proxies.
The Company's principal executive offices are located at 2700 West
Front Street, Statesville, North Carolina 28677-2927 (telephone 704/873-7202).
The proxy, together with this Proxy Statement and the accompanying
Notice of Annual Meeting of Stockholders, is being mailed to stockholders on, or
about, July 31, 1996.25, 1997.
ELECTION OF DIRECTORS
ThreeTwo Class III directors are to be elected at the meeting. The Board of
Directors, at its meeting on June 4, 1996,18, 1997, upon the recommendation of the
Nominating Committee, selected the following threeJohn C. Campbell, Jr. and James T. Rhind as
nominees for re-election as directors at the annual meeting, each to serve for a
three-year term expiring on the date of the 19992000 annual meeting of stockholders
and until their successors are elected and qualified: Margaret Barr Bruemmer, Wiley N. Caldwell and Thomas
F. Pyle. Allqualified. Both of the nominees are
serving as directors as of the date of this Proxy Statement. The Class III and
III directors named below have terms which expire in 19971998 and 1998,1999,
respectively.
The threetwo nominees receiving the greatest number of votes at the annual
meeting will be elected directors. Unless a stockholder indicates otherwise on
the proxy, proxies will be voted for the election of the threetwo nominees named
below. If due to circumstances not now foreseen, one or moreboth of the nominees
become unavailable for election, the proxies will be voted for such other person
or persons as the Board of Directors may select, or the Board will make an
appropriate reduction in the number of directors to be elected.
Nominees to serve until annual meeting of stockholders in 1999 (Class I):
MARGARET BARR BRUEMMER, 44, was elected a director of the Company in February
1995. Ms. Bruemmer has been engaged in the practice of law in Milwaukee,
Wisconsin as a sole practitioner since 1989 and has been a Trustee of the
Allis-Chalmers Corporation Product Liability Trust since June 1996.
WILEY N. CALDWELL, 69, was elected a director of the Company in 1988. From 1984
to 1992, when he retired, he was President of W.W. Grainger, Inc., a
distributor of electrical and mechanical equipment. He is a director of
CBI Industries, Inc. and Consolidated Papers, Inc.
THOMAS F. PYLE, 55, was elected a director of the Company in 1987. He has been
Chairman of the Board, President, Chief Executive Officer and principal
owner of RAYOVAC Corporation, a manufacturer of batteries and battery-
operated lighting devices, since 1982. He is also a director of Johnson
Worldwide Associates, Inc.
Directors to serve until annual meeting of stockholders in 1998 (Class III):
KINGMAN DOUGLASS, 72, was elected a director of the Company in 1986. He has
been engaged as a consultant in corporate counseling since 1986.
ELI MANCHESTER, JR., 65, was elected a director of the Company in November 1990.
He was elected President and Chief Executive Officer of the Company on July
11, 1990.
Directors to serve until annual meeting of stockholders in 19972000 (Class II):
JOHN C. CAMPBELL, JR., 53,54, was elected a director of the Company in 1973. Since
June 1995, Mr. Campbell has been engaged in private consulting. From May
1992 to June 1995, he was Chief Operating Officer, Executive Vice President
and a director of Grounds For Play, Inc., of Arlington, Texas, a
manufacturer of specialty equipment for children's playgrounds.
From January 1989 to April 1992, he was President of adjutant
Management Information Services, Arlington, Texas, a consulting firm.
JAMES T. RHIND, 74,75, was elected a director of the Company in 1966. Since
January 1, 1993, he has been engaged in the practice of law as of counsel
to the law firm of Bell, Boyd & Lloyd, Chicago, Illinois, counsel to the
Company. Prior thereto, he was a partner in that firm.
Directors to serve until annual meeting of stockholders in 1999 (Class I):
MARGARET BARR BRUEMMER, 45, was elected a director of the Company in February
1995. Ms. Bruemmer has been engaged in the practice of law in Milwaukee,
Wisconsin as a sole practitioner for more than five years and has been a
Trustee of the Allis-Chalmers Corporation Product Liability Trust since
June 1996.
WILEY N. CALDWELL, 70, was elected a director of the Company in 1988. From 1984
to 1992, when he retired, he was President of W.W. Grainger, Inc., a
distributor of electrical and mechanical equipment. He is a director of
APS Holdings, Inc. and Consolidated Papers, Inc.
THOMAS F. PYLE, 56, was elected a director of the Company in 1987. Since
September 1996, Mr. Pyle has been Chairman of The Pyle Group, LLC, a
financial service and investment company. From 1982 to August 1996, he was
Chairman of the Board, President, Chief Executive Officer and principal
owner of RAYOVAC Corporation, a manufacturer of batteries and battery-
operated lighting devices. He is also a director of Johnson Worldwide
Associates, Riverside Paper Corporation and Sub-Zero Freezer Co., Inc. and
a Trustee of the Wisconsin Alumni Research Foundation.
Directors to serve until annual meeting of stockholders in 1998 (Class III):
KINGMAN DOUGLASS, 73, was elected a director of the Company in 1986. He has
been engaged as a consultant in corporate counseling since 1986.
ELI MANCHESTER, JR., 66, was elected a director of the Company in November 1990.
He was elected President and Chief Executive Officer of the Company in July
1990.
Except as otherwise indicated, each director and nominee has had the
principal occupation mentioned above for more than five years. Mr. Campbell is
the first cousin of Laura Campbell Rhind, wife of Mr. Rhind.
The Board of Directors has set the size of the Board of Directors at
seven members, divided into three classes. The Company's certificate of
incorporation provides that the three classes shall be as nearly equal in number
as possible.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEThe Board of Directors recommends a vote FOR THE ELECTION OF EACH
OF THE FOREGOING NOMINEES FOR DIRECTOR.the election of each
of the foregoing nominees for director.
2
MEETINGS AND COMMITTEES OF THE BOARDMeetings and Committees of the Board
The business and affairs of the Company are managed under the
direction of the Board of Directors. Members of the Board keep informed of the
Company's business and activities by reports and proposals sent to them
periodically and in advance of each Board meeting and reports made to them
during these meetings by the President and other Company officers. The Board is
regularly advised of actions taken by the Executive Committee and other
committees of the Board, as well as significant actions taken by management.
Members of management are available at Board meetings and other times to answer
questions and discuss issues. During the Company's fiscal year ended April 30,
1996,1997, the Board of Directors held sixfour meetings.
The four standing committees of the Board of Directors of the Company
are the Executive Committee, the Audit Committee, the Compensation Committee and
the Financial/Planning Committee, the functions and membership of which are
described below.
The Executive Committee, consisting of Messrs. Rhind (Chairman),
Campbell and Manchester and Ms. Bruemmer, exercises the authority of the Board
between meetings of the full Board, subject to the limitations of the Delaware
General Corporation Law. It also acts as the Nominating Committee of the Board.
The Nominating Committee's function is to make recommendations to the full Board
with respect to candidates for Board membership, officers of the Company, and
Board committee membership. The Nominating Committee will consider as
prospective Board nominees persons brought to its attention by officers,
directors and stockholders. Proposals may be addressed to the Nominating
Committee at the address shown on the cover of this Proxy Statement, attention
of the Corporate Secretary. The Executive Committee met twothree times during the
Company's last fiscal year.
The Audit Committee, consisting of Messrs. Douglass (Chairman) and
Campbell and Ms. Bruemmer, is responsible for recommending annually to the Board
of Directors a firm of independent public accountants; reviewing the overall
scope of audits and the annual financial statements of the Company and reporting
to the Board on the Committee's conclusions; and making inquiries of the
independent accountants and the Company's financial officers and reporting to
the full Board concerning accounting methods, policies and financial and
operating controls. The Audit Committee met once during the Company's last
fiscal year.
The Compensation Committee, consisting of Messrs. Caldwell (Chairman),
Douglass, Pyle and Rhind, considers and provides recommendations to the Board of
Directors with respect to the compensation (salaries and bonuses) of officers of
the Company; short- and long-range compensation programs for officers and other
key employees of the Company; benefit programs for all employees of the Company;
and stock option grants to key employees. The Compensation Committee also acts
as the Stock Option Committee, administering and interpreting the stock option
plans for officers and other key employees. The Compensation Committee met threefour
times during the Company's last fiscal year.
The Financial/Planning Committee, consisting of Messrs. Pyle
(Chairman), Caldwell, Douglass and Manchester and Ms. Bruemmer, reviews and
provides recommendations
3
to the Board of Directors with respect to the annual budget for the Company, the
Company's
3
strategic plan and certain major expenditures of the Company. The
Financial/Planning Committee also reviews the investment results of the
Company's retirement plans. The Financial/Planning Committee met fourthree times
during the Company's last fiscal year.
In the Company's last fiscal year, no director attended less than 75%
of the aggregate of all meetings of the Board and all meetings held by
committees of the Board on which such director served. No executive officer of
the Company served as a member of the Compensation Committee or as a director of
any other entity, one of whose executive officers serves on the Compensation
Committee or is a director of the Company.
DIRECTOR COMPENSATIONDirector Compensation
Each director who is not an employee of the Company receives for his
services as such an annual retainer of $10,800$13,000 plus a fee of $900$1,000 for each day
of Board and/or committee meetings attended, a multiple-meeting fee of $1,125$1,250
and a $450$500 fee for telephone meetings. In addition, the Chairmen of the Audit,
Compensation and Financial/Planning Committees receive an annual fee of $1,350.$1,500.
Payment of such fees may be deferred at the request of a director. Non-employee
directors are also reimbursed for their expenses for each Board and committee
meeting attended. Under the Company's 1993 Stock Option Plan for Directors,
each of the Company's non-employee directors was granted a one-time option to
purchase 5,000 shares of the Company's common stock. These options become
exercisable in 25% increments on August 1 of each of the next four years after
the date of grant.
Non-employee directors may also elect to participate in the Company's
health insurance program, with a cost to them equal to the amounts paid by the
Company's employees for participation in the same programs. During the last
fiscal year, Mr. Campbell participated in this program.
Directors who are employees of the Company receive no compensation for
serving as directors.
4
EXECUTIVE COMPENSATION
CERTAIN SUMMARY COMPENSATION INFORMATIONCertain Summary Compensation Information
The following table sets forth certain information for each of the
fiscal years ended April 30, 1996,1997, April 30, 19951996 and April 30, 1994,1995, with
respect to the compensation of the Chief Executive Officer and the Company's
four other most highly compensated executive officers (the "named executive
officers") in all capacities in which they served.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
------------
Annual Compensation Securities All Other
Name and Fiscal ---------------------------------------------------------------------- Underlying Compensation
Principal Position Year Salary ($) Bonus ($) Other ($) Options (#) ($)(1)
- ------------------------------------- ------ ----------- ---------- ------------------- --------- ------------ ------------
Eli Manchester, Jr. 1997 263,333 156,000 - 10,000 16,784
President & Chief 1996 253,333 10,000 - - 11,107
President & ChiefExecutive Officer 1995 250,000 - - - 8,600
Executive Officer 1994 250,000William A. Shumaker 1997 144,759 42,135 - 5,000 3,739
Vice President and 1996 134,317 5,000 25,992 (2) 10,000 2,806
General Manager, 1995 127,083 6,000 - 10,000 875
Laboratory Products Group
T. Ronald Gewin 1997 140,175 15,000 - - - 9,497
T. Ronald Gewin6,083
Vice President-Operations, 1996 140,175 - - 10,000 5,614
Vice President-Operations,Technical Product Group 1995 135,725 6,000 - - 6,009
Technical Product Group 1994 130,667 16,020 - 10,000 1,762
D. Michael Parker (2)(3) 1997 118,333 34,500 - 5,000 6,003
Vice President-Finance, 1996 99,083 5,000 - 10,500 4,032
Vice President-Finance, 1995 - - - - -
Chief Financial Officer, 19941995 - - - - -
Treasurer and Secretary
Ronald D. Popiel (3)(4) 1997 133,333 34,500 - - 5,991
Vice President-Manu- 1996 106,943 10,000 - 12,500 2,800
Vice President-facturing (Laboratory 1995 - - - - -
Manufacturing 1994 - - - - -
William A. Shumaker(4) 1996 134,317 5,000 25,992 (5) 10,000 2,806
Vice President- 1995 127,083 6,000 - 10,000 875
Sales and Marketing 1994 49,819 - - - -Products Group)
- -------------------___________________
(1) The amount listed for each named executive officer consists of matching
contributions made by the Company during the year on behalf of that
executive officer to the Company's (i) Incentive Savings Plan and (ii)
Executive Deferred Compensation Plan. The separate amounts paid during
fiscal year 19961997 for each named executive officer are, respectively: Mr.
Manchester - $3,000$3,200 and $8,107;$13,584; Mr. Shumaker - $3,739 and $0; Mr. Gewin -$2,691-
$2,979 and $2,923;$3,104; Mr. Parker-
$1,975Parker - $2,940 and $2,057;$3,063; and Mr. Popiel- $2,067$2,934
and $733; and Mr. Shumaker- $2,086 and
$0.$3,057.
(2) Mr. Parker was elected Vice President-Finance, Chief Financial Officer,
Treasurer and Secretary effective August 1, 1995.
(3) Mr. Popiel was elected Vice President-Manufacturing effective January 1,
1996.
(4) Mr. Shumaker joined the Company on December 7, 1993 as Vice President-Sales
and Marketing.
(5) This amount represents amounts paid to or on behalf of Mr. Shumaker for
moving and relocation expenses.
(3) Mr. Parker was elected Vice President-Finance, Chief Financial Officer,
Treasurer and Secretary effective August 1, 1995.
(4) Mr. Popiel was elected Vice President-Manufacturing effective January 1,
1996.
5
OPTION GRANTS IN LAST FISCAL YEAROption Grants in Last Fiscal Year
The following table sets forth certain information with respect to
options granted under the Company's 1991 Key Employee Stock Option Plan during
fiscal year 19961997 to each named executive officer.
OPTION GRANTS IN FISCAL YEAR 19961997
Potential Realized Value
# of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise for Option Term (2)
Options Employees Price Per Expiration -------------------
Name Granted (1) in Fiscal Year Share ($) Date 5% ($) 10% ($)
- --------------------- -------------- ----------- -------------- --------- ---------- ------ -------
Eli Manchester, Jr. - - - - - -
T. Ronald Gewin 10,000 17.2% 2.750 6/38.5% 3.875 8/05 17,295 43,82728/06 24,370 61,758
William A. Shumaker 5,000 19.2% 3.875 8/28/06 12,185 30,879
D. Michael Parker 500 0.9% 2.750 6/8/05 865 2,191
10,000 17.2% 2.313 8/1/05 14,546 36,862
Ronald D. Popiel 500 0.9% 2.750 6/8/05 865 2,191
2,000 3.4% 2.875 8/30/05 3,616 9,164
10,000 17.2%5,000 19.2% 3.875 4/22/8/28/06 24,370 61,756
William A. Shumaker 10,000 17.2% 2.750 6/8/05 17,295 43,82712,185 30,879
- -------------------
(1) All options were granted at fair market value on the grant date. Options
become exercisable in 25% increments on the first through fourth
anniversaries of the grant date. Exercisability of options is accelerated
in the event of a "change of control" of the Company as defined in the
Plan.
(2) These amounts represent hypothetical gains that could be achieved for
options if they are exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the options are granted to the end of the
option term. Actual gains, if any, on stock option exercises are dependent
on the future performance of the Company's common stock and the optionee's
continued employment through the vesting period. There can be no assurance
that the amounts reflected in this table will be achieved.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT FISCAL YEAR-
ENDAggregate Option Exercises in Last Fiscal Year and Option Values at Fiscal Year-
End
The following table reflects the unexercised options and the value of
those options as of April 30, 19961997 held by each named executive officer. There
were no options exercised during fiscal year 1996.1997 for the named executive
officers.
OPTION VALUES AT FISCAL YEAR-END
Number of Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year-End (#)April 30, 1997 at Fiscal Year-EndApril 30, 1997 ($)
-------------------------- ----------------------------------------------- ---------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ----------- ------------- ----------- -------------
Eli Manchester, Jr. - 45,00010,000 - -12,500
William A. Shumaker 10,000 15,000 12,500 26,250
T. Ronald Gewin 8,000 16,000 - $ 8,75014,000 10,000 15,188 19,063
D. Michael Parker 125 10,875 $47 13,5582,875 13,125 7,796 28,699
Ronald D. Popiel 125 12,375 - 1,938
William A. Shumaker 5,000 15,000 - 8,7503,125 9,375 4,547 13,641
6
RETIREMENT PLANRetirement Plan
The executive officers of the Company participate in the Company's
Retirement Plan. The Retirement Plan provides retirement benefits for
participating employees which are calculated with reference to years of service
and final average monthly compensation (salary and bonus). The benefit amount
is calculated as 40% of the 10-year final average annual compensation (subject
to a maximum of $150,000)$160,000) minus 50% of the Primary Social Security Benefit, all
multiplied by a fraction, the numerator of which is the number of years of
credited service up to 30 years, and the denominator of which is 30.
Participants in the Retirement Plan may elect among several payment
alternatives. The following table shows estimated annual benefits payable to
employees with the indicated years of service and final average annual
compensation. The estimated annual benefits are based upon the assumption that
the Retirement Plan will continue in effect, without change, that the
participant retires at age 65, and that the participant does not elect any
alternate payment option under the Retirement Plan. At April 30, 1996,1997, the
credited years of service under the Retirement Plan for Messrs. Manchester,
Shumaker, Gewin, Parker, and Popiel were 6.6, 3.6, 4.6, 6.7, and Shumaker were 5.6, 3.6, 5.7, 2.5 and 2.6,3.5,
respectively.
Final Average Years of Service
-----------------------------------------------------Final Average ----------------------------------------------------
Compensation 10 15 20 25 30 35
- ------------ -- -- -- -- -- --
Greater than
$150,000 $17,500 $26,260 $35,010 $42,760 $52,510 $52,510$160,000 $18,680 $28,020 $37,360 $46,700 $56,040 $56,040
150,000 17,350 26,020 34,700 43,370 52,040 52,040
130,000 14,840 22,260 29,670 37,090 44,510 44,51014,680 22,020 29,360 36,700 44,040 44,040
100,000 10,840 16,260 21,670 27,090 32,510 32,51010,680 16,020 21,360 26,700 32,040 32,040
7
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under the captions "Compensation Committee
Report on Executive Compensation" and "Performance Graph" will not be deemed to
be filed or to be proxy soliciting material or incorporated by reference in any
prior or future filings by the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934 (the "Exchange Act").
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is designed to attract,
motivate, reward and retain management talent critical to the Company's
achievement of its objectives. The Compensation Committee of the Board, which
consists of four non-employee directors of the Company, considers and provides
recommendations to the full Board of Directors with respect to salaries and
other compensation programs for executive officers of the Company.
Salaries and other compensation for the Company's executive officers
are based on each executive officer's responsibilities and on his or her
performance over time, as well as on the recommendation of the Chief Executive
Officer. In order to assure that salaries and compensation remain competitive,
the Company subscribes to and consults various published surveys on executive
compensation.
Executive Officer Compensation
The Company's compensation program for executive officers has four
principal components which are discussed below.
Base Salary
The base salary of each of the executive officers, other than the
Chief Executive Officer, is determined after considering the compensation levels
of management personnel with similar responsibilities at other companies
utilizing compensation surveys for manufacturing and service companies with
generally similar annual sales volume. As these surveys are broad-based, they
include companies other than those comprising the Similar Market Capitalization
Index used in the Performance Graph below. Using the compensation surveys, a
salary range consisting of minimum, mid-point and maximum reference points is
established for each executive officer. The base salary for each executive
officer is then determined by considering the particular qualifications of the
executive holding the position, his or her level of experience, and his or her
sustained performance over time.
Annual Incentive Compensation
The Company's executive officers are eligible to participate in an
annual incentive compensationbonus plan, withpursuant to which each executive officer is
eligible to earn a cash bonus awardsfor each fiscal year of the Company, based
primarily on the Company's attainment of specified financialearnings goals and, to a lesser extent,
the achievement of individual objectivesperformance and other relevant factors which the
Board takes into account on a discretionary basis.
DuringAt the past fewbeginning of each fiscal year, the Board establishes earnings
goals for the Company for such year and, upon recommendation of the Compensation
Committee, establishes
8
specified percentages of the executive officers' beginning-of-the-year base
salaries that will be available for bonuses if the Company achieves these goals.
The percentages increase as the earnings goals reach various established levels.
For fiscal year 1997, the Company's earnings reached the maximum
established goal, permitting the participating executive officers to earn their
maximum payout percentages.
CEO Compensation
In establishing Mr. Manchester's salary for fiscal year 1997, the
Compensation Committee considered the same factors as in prior years, including
operating results for the prior year and the current year, development of the
Company's business through a strong management team, containment of operating
costs and general expenses, and the price of the Company's stock. Based on these
considerations, the Board, upon recommendation of the Compensation Committee,
increased Mr. Manchester's base salary from $260,000 to $270,000 per year,
effective January 1, 1997. Mr. Manchester received a cash bonus goals
have been short-range, that is, basedof $156,000 for
fiscal year 1997, equal to 60% of his base salary, under the Company's incentive
bonus plan, because the Company's earnings for the year reached the maximum
earnings goal. In August 1996, the Board granted Mr. Manchester a non-qualified
stock option on 10,000 shares of the Company's common stock with an exercise
price equal to the fair market value of the stock on the current year's operations.
Payments to participants are limited to a designated percentagedate of their annual
salary.
8
grant.
Stock Option Plans
The Company uses stock options as its primary long-term incentive plan
for executive officers. Stock options provide executive officers with an
incentive to improve the operations and increase profits of the Company, with
the opportunity to acquire and build an ownership interest in the Company and
share in the benefits of strong operating results and growth development. The
exercise price may not be less than the fair market value of the Company's
common stock on the date of the grant. Individual awards are based on the
individual's performance, his or her comparative base salary level and the
number of stock option grants previously made. Stock option awards are normally
made annually in August by the Board, based on the recommendations of the Chief
Executive Officer and the Compensation Committee.
Other Compensation Plans
Each of the Company's executive officers is entitled to receive
additional compensation in the form of payments, allocations, or accruals under
various group compensation and benefit plans. Benefits under these plans are not
directly, or indirectly, tied to employee or Company performance.
CEO Compensation
Mr. Manchester became President and Chief Executive Officer of the
Company in July 1990 and entered into an employment agreement in December 1990
providing for a base salary of not less than $250,000 per year. In establishing
his salary for fiscal year 1996, the Compensation Committee considered the same
factors as in prior years, including operating results for the prior year,
development of the Company's business through a strong management team,
containment of operating cost and general expenses, the stock price and Mr.
Manchester's personal recommendation. Based on these considerations, the Board,
upon recommendation of the Compensation Committee, increased Mr. Manchester's
base salary from $250,000 to $260,000 per year, effective January 1, 1996, and
granted Mr. Manchester a $10,000 bonus.
In connection with his employment agreement, during fiscal year 1991
the Company granted Mr. Manchester a non-qualified performance-based stock
option on 45,000 shares of the Company's common stock with an exercise price
equal to the fair market value of the stock on the grant date. This option will
expire unexercised in February 1997. Additionally, during fiscal year 1991 the
Company granted Mr. Manchester 50,000 restricted shares of the Company's common
stock under a Restricted Stock Agreement providing for a four-year vesting
period, which has now been completed. All 50,000 of these shares are now held
without restriction by Mr. Manchester. The Board granted these stock benefits
to Mr. Manchester so that he would have a significant ownership stake in the
operation and success of the Company.
COMPENSATION COMMITTEE MEMBERSMembers
Wiley N. Caldwell, Chairman
Kingman Douglass
Thomas F. Pyle
James T. Rhind
9
AMENDMENT TO THE 1991 KEY EMPLOYEE
STOCK OPTION PLAN
In 1991 the stockholders of the Company approved the 1991 Key Employee
Stock Option Plan (the "Plan"), under which options may be granted to executives
and other key employees of the Company on not more than 130,000 shares of the
Company's common stock. The Board of Directors has adopted an amendment to the
Plan to increase the number of shares available for options to 230,000, a
100,000 increase, and is requesting stockholder approval of the amendment.
The purpose of the Plan is to maintain and develop top management by
offering them a favorable opportunity to become stockholders in the Company over
a period of years, thus giving them a stake in the growth and prosperity of the
Company and encouraging the continuance of their services.
There are currently outstanding options under the Plan to purchase a total
of 101,500 shares, leaving 28,500 shares available for future options. The
Board of Directors believes that this number is insufficient to continue to meet
the Company's needs under its long-term incentive programs. (There is also
outstanding an option to purchase 45,000 shares granted under an expired prior
plan, which option is unexercisable and will expire on February 27, 1997 and may
not be re-granted.) If the amendment is approved, a total of 128,500 shares
will be available under the Plan for future grant. On July 23, 1996, the last
reported sale price of the Company's common stock on the Nasdaq National Market
(as reported by The Wall Street Journal (Eastern Edition)) was $3 3/8 per share.
Summary of the Plan. The following summary describes the principal
provisions of the Plan and is qualified in its entirety by the text of the Plan,
as proposed to be amended, a copy of which is attached as Exhibit A to the Proxy
Statement.
The Plan is administered by the Compensation Committee of the Board of
Directors, acting as the Stock Option Committee. Options may be granted until
May 28, 2001 by the full Board of Directors to key employees selected on the
basis of the special importance of their service. Options granted under the Plan
may be either incentive stock options designed to meet the requirements of
Section 422 of the Internal Revenue Code, or non-incentive stock options. All
options granted under the Plan have been non-incentive stock options. The Board
of Directors may grant substitute options, with the optionee's consent, at a
different option price to replace previously-granted options. If an outstanding
option expires or is terminated, the shares allocated to the unexercised portion
may again be optioned.
The purchase price for optioned shares is determined by the Board of
Directors at the time of grant, but may not be less than the fair market value
of the shares on the date of grant. Options may be for terms of up to 10 years,
the specific term to be determined by the Board of Directors at the time of
grant, and become exercisable in such installments as the Board of Directors
determines at the time of grant.
Options may be exercised by giving written notice to the Company of the
number of shares to be purchased, accompanied by the full purchase price in cash
or by certified or cashiers
10
check or, with the consent of the Board of Directors, through the surrender of
previously-acquired shares of the Company. At the time of exercise the Company
may require the optionee to pay an amount equal to the tax that the Company may
be required to withhold to obtain a deduction for federal income tax purposes as
a result of the exercise of the option. With the consent of the Board of
Directors, this amount may be paid by withholding shares of equal value from the
shares being purchased.
In the event of a "Change in Control" of the Company as defined in
Paragraph 6 of the Plan, all outstanding options become immediately exercisable
in full without regard to installments. For the conditions under which an option
may be exercised in the event of a termination of employment, see Paragraph 9 of
the Plan.
The Board may amend or discontinue the Plan, except that no amendment or
discontinuance may change or impair an option previously granted without the
consent of the optionee, increase the maximum number of shares subject to
option, change the minimum purchase price, change the limitations on the option
period, or increase the time limitation on the grant of options.
In the event the Company shares are changed by a stock dividend, stock
split or combination of shares, or a merger, consolidation or reorganization
with another Company or other relevant change in the capitalization of the
Company, the Board of Directors is required to make an appropriate adjustment in
the number of shares subject to option and in the purchase price for shares.
Options are not transferable, otherwise than by will or the laws of dissent
and distribution.
Federal Income Tax Consequences of the Plan. The following is a brief
summary of the current federal income tax rules relevant to stock options issued
under the Plan. These rules are subject to change in the future.
The Company understands that, with respect to non-incentive stock options,
under existing federal income tax laws (1) no income will be recognized to the
optionee at the time of grant, (2) upon exercise of an option, the optionee will
be required to treat as ordinary income the difference on the date of exercise
between the option price and the fair market value of the stock purchased, and
the Company will be entitled to a deduction (subject to the $1 million cap
described below, if applicable) equal to such amount and (3) assuming the shares
received constitute capital assets in the optionee's hands, any gain or loss
upon disposition of the shares will be treated as capital gain or loss, which
will be long-term if the shares are held longer than one year.
With respect to incentive stock options, the Company understands that under
existing federal income tax law, if shares are not disposed of by the optionee
within two years from the date of grant of the option or within one year after
the transfer of the shares to the optionee, then (i) no income will be
recognized to the optionee upon either the grant or the exercise of the option,
(ii) any gain or loss will be recognized to the optionee only upon ultimate
disposition of the shares and, assuming the shares constitute capital assets in
the optionee's hands, will be
11
treated as long-term capital gain or loss, and (iii) the Company will not be
entitled to a federal income tax deduction in connection with the grant or the
exercise of the option. If an optionee disposes of the shares acquired under an
incentive stock option, within two years from the date of grant or within one
year after the receipt of the shares, ordinary income will be recognized to the
optionee in any amount equal to the difference between the option price and the
lesser of the fair market value of the shares on the date of exercise or the
selling price; the balance of the optionee's gain on such disposition, if any,
will be taxed as capital gain, and if the Company complies with certain
withholding requirements, it will be entitled to a deduction in the year of
disposition equal to the amount of ordinary income recognized to the optionee.
A publicly held corporation may not, subject to certain exceptions, deduct
for federal income tax purposes in any taxable year certain compensation paid to
certain executives in excess of $1 million for each such executive. The Company
believes that under recently promulgated regulations, this $1 million cap will
be inapplicable to options granted under the Plan.
Options Granted Under the Plan. As of June 30, 1996, the Company had
options outstanding for an aggregate of 101,500 shares of the Company's common
stock under the Plan at a weighted average exercise price of $3.70 per share.
The following table sets forth certain information with respect to options
granted under the Plan through June 30, 1996:
NUMBER OF
NAME SHARES UNDERLYING OPTIONS
---- -------------------------
Eli Manchester, Jr................................................... -
T. Ronald Gewin...................................................... 24,000
D. Michael Parker.................................................... 11,000
Ronald D. Popiel..................................................... 12,500
William A. Shumaker.................................................. 20,000
All executive officers as a group (6 persons)........................ 81,500
All directors who are not executive officers as a group (6 persons).. -
All eligible employees who are not executive officers or associates
thereof and consultants as a group (approximately 9 persons)...... 20,000
Approval of the Plan. The affirmative vote of the holders of a majority of
the shares of the Company's common stock present in person or represented by
proxy at the meeting is necessary to approve the amendment to the Plan. Unless
otherwise indicated, properly executed proxies which are returned in a timely
manner will be voted in favor of the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSED AMENDMENT.
---
12
PERFORMANCE GRAPH
The graph below sets forth a comparison of the Company's annual
stockholder return with the annual stockholder return of (i) the NASDAQ Market
Index, and (ii) an index of all NASDAQ, non-financial companies with similar
market capitalization to the Company/1/. The graph is based on an investment of
$100 on April 30, 19911992 in the Company's common stock, assuming dividend
reinvestment. The graph is not an indicator of the future performance of the
Company. Thus, it should not be used to predict the future performance of the
Company's stock. The graph and related data were furnished by Media General
Financial Services, Richmond, Virginia.
Comparison of 5-Year Cumulative Total Return
Kewaunee Scientific Corporation, NASDAQ Market Index
and Similar Market Capitalization Index
[GRAPH]
1991
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Kewaunee Scientific Corporation 100 115.26 73.47 60.51 43.22 62.6763.74 52.50 37.50 54.37 77.84
Peer Group 100 109.65 83.29 68.37 46.99 41.4673.20 61.79 42.56 41.22 43.10
Nasdaq Market Index 100 102.58 122.56 137.56 150.21 209.67119.48 134.11 146.43 204.40 217.88
- -----------------------------------------------
/1/In addition to the Company, the Similar Market Capitalization Index is
comprised of the following companies: Amcor Limited; Canterbury Park Holding
Corporation; Curtis Mathes Holding Corporation; Enterprise Oil; Environmental
Technologies Corp.; Great Pines
Water Company, Inc.; HMG/Courtland Properties Inc.; Huntway Partners L.P.;
London Pacific Group, Limited; Lotto World Inc.; Nashville Country Club, Inc.; North Coast Energy,
Inc.; OTR Express, Inc.; P & F Industries, Inc.; Polish Telephones and Microwave Corporation; Research, Incorporated;
Stacey's Buffet, Inc.; Synergy Renewable Resource Technologies Inc.; TAT
Technologies Ltd.; THT Inc.; Tubby's Inc.; Valley Systems, Inc.; and Waste
Technology Corp. Consistent with the prior year, the Company used for an index
NASDAQ, non-financial companies with a market capitalization at the end of the
respective fiscal year similar to that of
the Company. This index was used because there exists no applicable published
industry index or line-of-business index, and the Company does not believe it
can reasonably identify a peer group of companies in its industry because the
Company's primary competitors are either divisions of larger corporations or are
privately owned.
The range of
market capitalization for the companies in the current year index is $8.4
million to $8.7 million, and the Company's market capitalization was
approximately $8.6 million at April 30, 1996. The range of market capitalization
for the companies in the prior year index was $6.7 million to $7.3 million, and
the Company's market capitalization was approximately $7.0 million at April 30,
1995.
1310
AGREEMENTS WITH CERTAIN EXECUTIVES
On December 11, 1990,7, 1993, the Company and Mr. Manchester entered into an employment agreement
with Mr. Shumaker providing for his employment as PresidentVice President-Sales and
Chief
Executive Officer of the Company.Marketing. The agreement provides for aan annual salary of not
less than $250,000 per year, to be reviewed annually by the Compensation
Committee and the Board of Directors,commencing at $125,000
and the opportunity to participate in all
fringe benefit plansthe Company's Incentive Bonus Plan and Key
Employee Stock Option Plan. Mr. Shumaker also receives benefits generally
available to executives of the Company. UnderThe agreement also provides that if Mr.
Shumaker is terminated from employment without cause, Mr. Shumaker will be
entitled to separation pay equal to six months of his then base salary, reduced
by income earned during the agreement, the Company granted Mr. Manchester a non-qualified performance-based
stock option on 45,000 shares of the Company's common stock. This option will
expire unexercised in February 1997. In connection with this employment
agreement, during fiscal year 1991 the Company also granted Mr. Manchester
50,000 restricted shares of the Company's common stock under a Restricted Stock
Agreement providing for a four-year vesting period, which has now been
completed.payment period.
On December 8, 1992, the Company entered into an employment agreement
with Mr. Gewin providing for his employment as Vice President-Manufacturing. The
agreement provides for an annual salary commencing at $125,000 and the
opportunity to participate in the Company's Incentive CompensationBonus Plan and the Key
Employee Stock Option Plan. He also is entitled to receive benefits generally
available to executives of the Company. On December 15, 1994, the Company also
entered into an agreement with Mr. Gewin which provides that if the Company is
acquired, and he is terminated without cause within two years from the
acquisition date, the Company or successor entity will be obligated to pay him
separation pay equal to twelve months of his then base salary, reduced by income
earned during the payment period.
On December 7, 1993,September 17, 1996, the Company entered into an employment agreement with Mr.
Shumaker providing for his employment as Vice President-Sales and
Marketing. The agreement provides for an annual salary commencing at $125,000
and the opportunity to participate in the Company's Incentive Compensation Plan
and Key Employee Stock Option Plan. Mr. Shumaker also receives benefits
generally available to executives of the Company. The agreement alsoParker which provides that if Mr. Shumakerthe Company is acquired, and he is terminated
from employment without cause Mr. Shumakerwithin two years from the acquisition date, the Company or
successor entity will be entitledobligated to pay him separation pay equal to six months
of his then base salary, reduced by income earned during the payment period.
On April 22, 1996, the Company entered into an employment agreement
with Mr. Popiel providing for his employment as Vice President-Manufacturing.
The agreement provides for a minimum annual compensation of $140,000 per year,
effective fiscal year 1997, reached through the combination of base salary and
incentive compensation. Mr. Popiel also receives benefits generally available to
executives of the Company. The agreement also provides that if Mr. Popiel is
terminated from employment without cause, Mr. Popiel will be entitled to
separation pay equal to twelve months of his then annual base salary, reduced by
income earned during the payment period.
1411
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information with respect to the
"beneficial ownership" (as defined by the Securities and Exchange Commission) of
shares of the Company's common stock, as of June 30, 1996,1997, by (i) each director
and director nominee, (ii) each of the named executive officers and (iii) all
directors and executive officers as a group. Except as otherwise indicated by
footnote, the shares shown are held directly with sole voting and investment
power.
Shares Percent
beneficially of
Name owned (1) class
------------ ---- --------- -----
Margaret Barr Bruemmer(2)..................................... 46,885................................. 48,135 2.0%
Wiley N. Caldwell............................................. 4,250Caldwell......................................... 5,500 *
John C. Campbell, Jr.(3)...................................... 45,417 1.9%.................................. 46,667 2.0%
Kingman Douglass(4)........................................... 13,750....................................... 15,000 *
Eli Manchester, Jr.(5)........................................ 65,300 2.8%.................................... 67,800 2.9%
Thomas F. Pyle(6)............................................. 9,750......................................... 11,000 *
James T. Rhind(7)............................................. 385,100......................................... 386,351 16.3%
T. Ronald Gewin(8)............................................ 13,060........................................ 19,060 *
William A. Shumaker........................................... 9,000Shumaker....................................... 15,250 *
D. Michael Parker(9).......................................... 5,750...................................... 9,750 *
Ronald D. Popiel.............................................. 125Popiel.......................................... 3,250 *
Directors and executive officers as a group (12(13 persons)(10).. 608,003 25.7%644,679 27.2%
- -------------------
* Percentage of class is less than 1%.
(1) Includes shares which may be acquired within sixty (60) days from June 30,
19961997 upon exercise of options by: Ms. Bruemmer - 2,500;3,750; Mr. Caldwell -
3,750;5,000; Mr. Campbell - 3,750;5,000; Mr. Douglass - 3,750;5,000; Mr. Pyle- 3,750;Manchester - 2,500;
Mr. Pyle - 5,000; Mr. Rhind - 3,750;5,000; Mr. Gewin - 13,000;19,000; Mr. Shumaker -
13,750; Mr. Parker - 2,750;6,750; Mr. Popiel - 125;3,250; and Mr. Shumakerall directors and
executive officers as a group - 7,500.89,500.
(2) Includes 2,000 shares held as custodian for Ms. Bruemmer's minor children
and 42,385 shares held by Ms. Bruemmer's husband.
(3) Includes 5,82611,826 shares held by Mr. Campbell's wife, as to which shares he
disclaims beneficial ownership.
(4) Includes 10,000 shares held by a trust of which Mr. Douglass is a trustee.
(5) Includes 300 shares held by a trust of which Mr. Manchester is trustee.
(6) Includes 6,000 shares in which Mr. Pyle shares voting and investment power.
(7) Includes 196,452243,079 shares held by Mr. Rhind's wife, Laura Campbell Rhind,
90,70644,080 shares held by Mrs. Rhind as executor and beneficiary ofa trust under the Estatewill of Ruth Haney Campbell, as to
which shares he disclaims beneficial
ownership,Mrs. Rhind is a trustee and beneficiary, 44,910 shares held by two
trusts of which Mr. Rhind is sole trustee, as to which shares he disclaims beneficial ownership, and 12,000 shares owned by a
charitable foundation of which he is oneMr. and Mrs. Rhind are two of three
directors, as to which shares hedirectors. Mr. Rhind disclaims beneficial ownership.ownership of all of such shares.
(8) Includes 12060 shares held by Mr. Gewin's wife, as to which shares he
disclaims beneficial ownership.
(9) Includes 3,000 shares in which Mr. Parker shares voting and investment
power.
(10) Directors and executive officers as a group had sole voting and investment
power over 143,039 shares of the Company's common stock outstanding on June
30, 1996, shared voting and investment power over 411,339 shares, and held
options to purchase 53,625 shares which were currently exercisable or would
become exercisable within 60 days from June 30, 1996.
1512
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information with respect to the
"beneficial ownership" (as defined by the Securities and Exchange Commission) of
shares of the Company's common stock, as of June 30, 1996,1997, by each person who is
known by management of the Company to have been the "beneficial owner" of more
than five percent of such stock as of such date. Except as otherwise indicated
by footnote, the shares shown are held with sole voting and investment power.
Shares Percent
beneficially of
Name owned class
- ---- --------------- ----------------- --------
John L. Bruemmer............................ 138,475(1) 5.9%
Coronet Insurance Company and Subsidiaries.. 290,100(2) 12.3%189,600(2) 8.0%
Elizabeth B. Gardner........................ 224,569(3) 9.5%
Laura Campbell Rhind........................ 385,100(4)386,351(4) 16.3%
Dimensional Fund Advisors, Inc.............. 145,000(5) 6.1%120,600(5) 5.1%
- -------------------
(1) Mr. Bruemmer's address is 1556 E. Goodrich Lane, Milwaukee, Wisconsin
53217.
(2) The shares owned by Coronet Insurance Company listed in the table are shown
as being owned as of AugustJuly 31, 19951996 according to a Form 4 Report filed with
the Securities and Exchange Commission on September 8, 1995.9, 1996. Coronet
Insurance Company's address is 35004500 West Peterson Avenue, Chicago, Illinois
60659.
(3) Includes 77,593 shares held by Mrs. Gardner as a trustee of certain
irrevocable trusts for the benefit of her children, as to which shares she
disclaims beneficial ownership, and 11,925 shares held by Mrs. Gardner's
husband, as to which shares she disclaims beneficial ownership. Mrs.
Gardner's address is 42 Logan Terrace, Golf, Illinois 60029.
(4) Includes 90,70644,080 shares held as executortrustee and beneficiary of a trust under the
Estatewill of Ruth Haney Campbell, 84,69287,192 shares held by Mr. Rhind personally or
as trustee, as to which shares she disclaims beneficial ownership, and
12,000 shares held by a charitable foundation of which Mr. and Mrs. Rhind
are two of three directors. Mr. and Mrs. Rhind and the third director
share voting and investment power over these shares, but disclaim
beneficial ownership of them. Mrs. Rhind's address is 830 Normandy Lane,
Glenview, Illinois 60025.
(5) The shares owned by Dimensional Fund Advisors listed in the table are shown
as being owned as of December 31, 19951996 according to a Schedule 13G filed
with the Securities and Exchange Commission on February 9, 1996.12, 1997.
Dimensional Fund Advisors' address is 1299 Ocean Avenue, Santa Monica,
California 90401.
On the basis of reports filed by the directors, executive officers and
10% stockholders of the Company, all Forms 3, 4 and 5 showing ownership of and
changes in ownership in the Company's equity securities during fiscal year 1996
were timely filed with the Securities and Exchange Commission as required by
Section 16(a) of the Securities Exchange Act of 1934.
161934 requires the
Company's executive officers, directors and 10% stockholders to file reports of
ownership with the Securities and Exchange Commission. Such persons also are
required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of copies of such forms received by it and
inquiries of such persons, the Company believes that all such filing
requirements applicable to its executive officers, directors and 10%
stockholders were complied with.
13
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has been selected by the Board of Directors,
upon the recommendation of its Audit Committee, to act as the Company's
independent public accountants for the fiscal year ending April 30, 1997.
Deloitte & Touche LLP served as independent public accountants for the
Company for the fiscal year ended April 30, 1996.1997. A representative of Deloitte &
Touche LLP is expected to attend the annual meeting and will be afforded an
opportunity to make a statement if he desires to do so and to respond to
questions by stockholders.
STOCKHOLDER PROPOSALS
The deadline for receipt of stockholder proposals for inclusion in the
Company's 19971998 proxy material is March 21, 1997.1998. Any stockholder proposal should
be submitted in writing to the Secretary of the Company at its principal
executive offices. The stockholder proposal must include the stockholder's name
and address as it appears on the Company's records and the number of shares of
the Company's common stock beneficially owned by such stockholder. In addition,
(i) for proposals other than nominations for the election of directors, such
notice must include a description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting, and any
material interest of the stockholder in such business, and (ii) for proposals
relating to stockholder nominations for the election of directors, such notice
must also include, with respect to each person nominated, the information
required by Regulation 14A under the Exchange Act.
PROXIES AND VOTING AT THE MEETING
The expense of solicitation of proxies is to be paid by the Company.
The Company will also reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in sending proxies and proxy
material to the beneficial owners of the stock.
At the close of business on July 12, 1996,11, 1997, the record date for
determination of stockholders entitled to vote at the annual meeting, there were
2,366,7172,365,921 shares of common stock of the Company outstanding and entitled to
vote.
Each share of common stock is entitled to one vote. Any stockholder
giving a proxy has the power to revoke it at any time before it is voted, by
written notice to the Secretary, by delivery of a later-datelater-dated proxy or in person
at the meeting.
The holders of a majority of the total shares of common stock issued
and outstanding, whether present in person or represented by proxy, will
constitute a quorum for the transaction of business at the meeting. The vote of
a plurality of the shares represented at the meeting, in person or by proxy, is
required to elect the threetwo nominees for director. Approval of the amendment to
the Plan, and, in general, approval of any other matter
submitted to the stockholders for their consideration at the meeting requires in each case,
the affirmative vote of the holders of a majority of the shares of common stock
represented at the meeting, in person or by proxy, and entitled to vote.
Abstentions, directions to withhold authority, and broker non-
17
votesnon-votes are counted
as shares present in the determination of whether the shares of stock
represented at the meeting constitute a quorum. Abstentions, directions to
withhold authority, and broker non-votes are not counted in tabulations of the
votes cast on
14
proposals presented to stockholders. Thus, an abstention, direction to withhold
authority, or broker non-vote with respect to a matter has the same legal effect
as a vote against the matter. An automated system administered by the Company's
transfer agent will be used to tabulate votes.
A stockholder entitled to vote for the election of directors can
withhold authority to vote for any of the nominees for Class III directors.
FINANCIAL STATEMENTS
The Company has enclosed its Annual Report to Stockholders for the
fiscal year ended April 30, 19961997 with this Proxy Statement. Stockholders are
referred to the report for financial and other information about the Company,
but such report is not incorporated in this Proxy Statement and is not a part of
the proxy soliciting material.
OTHER MATTERS
Management of the Company knows of no other matters which are likely
to be brought before the annual meeting. If any such matters are brought before
the meeting, the persons named in the enclosed proxy will vote thereon according
to their judgment.
By Order of the Board of Directors
/s/ D. MICHAEL PARKERMichael Parker
D. MICHAEL PARKER
Secretary
July 31, 1996
18
EXHIBIT A
KEWAUNEE SCIENTIFIC CORPORATION
1991 KEY EMPLOYEE STOCK OPTION PLAN
STATEMENT OF PURPOSE
The purpose of this Stock Option Plan (the "Plan") is to benefit KEWAUNEE
SCIENTIFIC CORPORATION (the "Company") and its subsidiaries through the
maintenance and development of top management by offering certain present and
future executive and key personnel a favorable opportunity to become holders of
stock in the Company over a period of years, thereby giving them a permanent
stake in the growth and prosperity of the Company and encouraging the
continuance of their services with the Company or its subsidiaries. Options
granted under this Plan are intended to qualify as "Incentive Stock Options" as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or as stock options that are not incentive stock options, according to
the designation at time of grant by the Board of Directors of the Company.
1. Administration. The Plan shall be administered by the Board of
Directors of the Company, whose interpretation of the terms and provisions of
the Plan shall be final and conclusive. The Board of Directors may, in its
discretion, delegate to a committee or three or more members of the Board (none
of whom is or was at any time within one year before appointment to the
Committee eligible to participate in the Plan) the authority to administer such
matters under the Plan and options granted under the Plan as the Board of
Directors may specify.
2. Eligibility. Options shall be granted only to key employees of the
Company and its subsidiaries (including officers, and including directors of the
Company and its subsidiaries who are also employees), selected initially and
from time to time thereafter by the Board of Directors on the basis of the
special importance of their services in the management, development and
operations of the Company or its subsidiaries. In the case of incentive stock
options, no option shall be granted to any employee who, immediately after such
option is granted, would own, within the meaning of section 422(b)(6) of the
Code, stock possessing more than 10 percent of the total combined voting power
of all classes of stock of the Company or any of its subsidiaries, except that
an option may be granted to such an employee if at the time the option is
granted the option price is at least 110 percent of the fair market value of the
stock subject to the option and the option by its terms is not exercisable after
the expiration of five years from the date the option is granted.
3. Granting of Options. The Board of Directors may grant options to
purchase from the Company a total of not more an 230,000 shares of the common
stock of the Company, subject to adjustment as provided in Paragraph 10. For
incentive stock options granted under the Plan, the aggregate fair market value
(determined as of the time the option is granted) of the stock with respect to
which options are exercisable for the first time by any employee during any
calendar year (under all incentive stock option plans of the Company and its
parent and subsidiary corporations) shall not exceed $100,000.
No options shall be granted under the Plan subsequent to May 28, 2001.
In the event that an option expires or is terminated or canceled
unexercised as to any shares, such released shares may again be optioned. Shares
subject to options may be made available from unissued or reacquired shares of
common stock.
The Board of Directors may, with the optionee's consent, grant substitute
options at a different price or with different provisions to replace previously-
granted outstanding options.
Nothing contained in the Plan or in any option granted pursuant thereto
shall confer upon any optionee any right to be continued in the employment of
the Company or any subsidiary of the Company, or interfere in any way with the
right of the Company or its subsidiaries to terminate his employment at any
time.
4. Option Price. The option price shall be determined by the Board of
Directors and, subject to the provisions of Paragraph 2 and Paragraph 10 hereof,
shall be not less than the fair market value, at the time the option is granted,
of the stock subject to the option.
5. Duration of Options, Increments and Extensions. Subject to the
provisions of Paragraph 2 and Paragraph 8 hereof, each option shall be for such
term of not more than ten years as shall be determined by the Board of Directors
at the date of the grant. Each option shall become exercisable in such
installments, at such time or times, and may be subject to such conditions based
upon the performance of the Company, as the Board of Directors may in its
discretion determine at the date of grant.
Subject to the foregoing, the Board of Directors may in its discretion (i)
accelerate the exercisability of any option or (ii) at any time prior the
expiration or termination of an option previously granted, extend the term of
such option (including options held by officers or directors) for such
additional period as the Board of Directors, in its discretion, shall determine;
provided, however, that the aggregate option period with respect to any option,
including the original term of the option and any extension thereof, shall never
exceed ten years.
6. Change in Control. Any option granted under the Plan to an optionee
who is an employee of the Company or any of its subsidiaries on the date of a
Change in Control shall be immediately exercisable in full on such date and
thereafter during its specified term. The words "Change in Control" shall mean
the occurrence, at any time during the specified term of an option granted under
the Plan, of any of the following events:
(a) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, or there is an offer
to holders of the common stock generally relating to the
acquisition of their shares, and as a result of such merger,
consolidation, reorganization or offer, less than 75% of the
outstanding voting securities or other capital interests of the
surviving, resulting or acquiring corporation or other legal
person are owned in the aggregate by the stockholders of the
Company immediately prior to such merger, consolidation,
reorganization or offer;
(b) The Company sells all or substantially all of its business and/or
assets to any other corporation or other legal person, less than
75% of the outstanding voting securities or other capital
interests of which are owned in the aggregate, directly or
indirectly, by the persons who were stockholders of the Company
immediately before or after such sale; or
(c) During any period of two consecutive years, individuals who at
the beginning of any such period constitute the directors of the
Company cease for any reason to constitute at least a majority
thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director of the Company
was approved by a vote of at least two-thirds of such directors
of the Company then still in office who were directors of the
Company at the beginning of such period.
The provisions of this Paragraph 6 shall not apply to an option which
contains performance standards as a condition upon exercise, except that in the
event of a Change of Control the Board of Directors may waive the performance
standards if it determines, in its sole discretion, that based on results of
operations prior to the Change of Control, the standards would reasonably be
expected to have been met within the relevant period or periods.
7. Exercise of Option; Withholding. An option may be exercised by giving
written notice to the Company, attention of the Secretary, specifying the number
of shares to be purchased, accompanied by the full purchase price for the shares
to be purchased in cash, or by certified or cashier's check, except that the
Board of Directors may permit the purchase price of the shares to be paid, all
or in part, by the delivery to the Company of other shares of common stock of
the Company in such circumstances and manner as it may specify. For this
purpose, the per share value of the Company's common stock shall be its fair
market value at the close of business on the date preceding the date of
exercise.
2
At the time of any exercise of any option, the Company may, if it shall
determine its necessary or desirable for any reason, require the optionee (or
the optionee's heirs, legatees, or legal representative, as the case may be) as
a condition upon the exercise thereof, to deliver to the Company a written
representation of present intention to purchase the shares for investment and
not for distribution. In the event such representation is required to be
delivered, an appropriate legend may be placed upon each certificate delivered
to the optionee upon exercise of part or all of the option and a stop transfer
order may be placed with the transfer agent. Each option shall also be subject
to the requirement that, if at any time the Company determines, in its
discretion, that the listing, registration or qualification of the shares
subject to the option upon any securities exchange or under any state or Federal
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the issue or purchase of
shares thereunder, the option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable by the Company.
At the time of the exercise of any option that is not an incentive stock
option, the Company may require, as a condition of the exercise of such option,
the optionee to pay the Company an amount equal to the amount of the tax the
Company may be required to withhold to obtain a deduction for federal income tax
purposes as a result of the exercise of such option by the optionee. At the
request of the optionee, and subject to the permission of the Board of
Directors, the Company will withhold from the shares being purchased that number
of shares, valued at their fair market value at the close of business on the
date preceding the date of exercise, necessary to equal in value the full amount
of the withholding tax.
8. Termination of Employment--Exercise Thereafter. Unless otherwise
determined by the Board of Directors at the time of grant:
(a) If the employment of an optionee with the Company or any of its
subsidiaries terminates for any reason except discharge for
cause, an option which is not an incentive stock option may be
exercised as follows:
(i) if the optionee's employment is terminated otherwise than
by death, disability or retirement, by the optionee at any
time within three months after such termination;
(ii) if the optionee's employment is terminated by death, by
the optionee's heirs, legatees or legal representatives at
any time within one year after the date of death;
(iii) if the optionee's employment is terminated because of
disability (as defined in Section 22(e)(3) of the Code),
by the optionee at any time within one year after the date
of such termination; or
(iv) if the optionee's employment is terminated by retirement
(as defined in the Company's qualified retirement plan for
salaried employees), by the optionee within three years
after the date of retirement.
For an incentive stock option, these same provisions shall apply except the
exercise period following termination of employment because of death or
retirement shall not exceed three months.
(b) Notwithstanding the foregoing, an option shall not be exercisable
after the expiration of its specified term and shall be
exercisable only to the extent it was exercisable at the date of
such termination of employment, except that if the optionee's
employment is terminated by death at any time on or after the
first anniversary of the option, the option may be exercised in
full during its specified term during the period provided above.
3
(c) If an optionee is discharged for cause, the option shall expire
forthwith and all rights to purchase shares under it shall
terminate immediately. For this purpose, "discharge for cause"
means a discharge on account of dishonesty, disloyalty or gross
misconduct.
9. Non-Transferability of Options. No option shall be transferable by the
optionee otherwise than by will or the laws of descent and distribution and each
option shall be exercisable during an optionee's lifetime only the optionee.
10. Adjustment. The number of shares subject to the Plan and to options
granted under the Plan shall be adjusted as follows: (a) in the event that the
Company's outstanding common stock is changed by any stock dividend, stock split
or combination of shares, the number of shares subject to the Plan and to
options granted thereunder shall be proportionately adjusted; (b) in the event
any merger, consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an equitable basis as
determined by the Board of Directors, for each share of common stock then
subject to the Plan, whether or not at the time subject to outstanding options,
the number and kind of shares of stock or other securities or cash or other
property to which the holders of common stock of the Company will be entitled
pursuant to the transaction; and (c) in the event of any other relevant change
in the capitalization of the Company, the Board of Directors shall provide for
an equitable adjustment in the number of shares of common stock then subject to
the Plan, whether or not then subject to outstanding options. In the event of
any such adjustment, the purchase price per share shall be proportionately
adjusted.
11. Amendment of Plan. The Board of Directors may amend or discontinue
the Plan at any time. However, no such amendment or discontinuance shall (a)
change or impair any option previously granted, without the consent of the
optionee, (b) increase the maximum number of shares which may be purchased by
all employees, (c) change the minimum purchase price, or (d) change the
limitations on the option period or increase the time limitations on the grant
of option.
12. Effective Date. The Plan has been adopted by the Board of Directors
for submission to the stockholders of the Company. If the Plan is approved by
the affirmative vote of the holders of a majority of the voting stock of the
Company voting in person or by proxy at a duly held stockholders' meeting, it
shall be deemed to have become effective on May 29, 1991, the date of adoption
by the Board of Directors.
425, 1997
15
PROXY
KEWAUNEE SCIENTIFIC CORPORATION
2700 WEST FRONT STREET
STATESVILLE, NORTH CAROLINAWest Front Street
Statesville, North Carolina 28677-2927
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kingman Douglass,Margaret Barr Bruemmer, Eli
Manchester, Jr. and John C. Campbell, Jr.Thomas F. Pyle as Proxies, each with power of substitution,
and hereby authorizes them to represent and to vote, as designated on the
reverse side hereof, all the shares of common stock of Kewaunee Scientific
Corporation held of record by the undersigned on July 12, 1996,11, 1997, at the Annual
Meeting of Stockholders to be held at 10:00 a.m., Central Daylight Time, on
August 28,
199627, 1997 and at any adjournment thereof.
Your vote for threetwo directors may be indicated on the reverse side. Thomas F. Pyle, Wiley N. CaldwellJohn
C. Campbell, Jr. and Margaret Barr BruemmerJames T. Rhind have been nominated for election as Class III
Directors. Your vote for amendment to the
Company's 1991 Key Employee Stock Option Plan increasing the number of shares
of Common Stock authorized under the Plan from 130,000 to 230,000 may also be
indicated on the reverse side.
(Continued and to be signed on the reverse side)
This proxy when properly executed will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the election of the nominees named in Item 1 below and FOR the amendment to the
Company's Key Employee Stock Option Plan.below. Please mark your vote inside
one box below.
1. Election of Class III Directors:
Thomas F. Pyle, Wiley N. CaldwellJohn C. Campbell, Jr. and Margaret Barr BruemmerJames T. Rhind
FOR the nominees listed WITHHOLD AUTHORITY
above (except as to vote for
marked to the contrary the nominees
on the line below) listed above
[_] [_]
If you wish to withhold authority for either of the
nominees, write such nominee's name in this space
- --------------------------------------_______________________________________
2. To approve an amendment to the Company's 1991 Key Employee Stock Option
Plan increasing the number of shares of Common Stock, authorized for issuance
under the Plan from 130,000 to 230,000.
[_] For [_] Against [_] Abstain
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
You are urged to date, sign and return promptly this proxy in the envelope
provided. It is important for you to be represented at the Meeting. The
execution of this proxy will not affect your right to vote in person if you are
present at the Meeting and wish to so vote.
Date: , 1996
----------------------
---------------------------------______________________, 1997
_________________________________
Signature
---------------------------------_________________________________
Signature if held jointly
IMPORTANT: PLEASE SIGN EXACTLY AS YOUR NAME
OR NAMES APPEAR HEREON. IF SIGNING AS AN
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, OR IN SOME OTHER REPRESENTATIVE
CAPACITY, OR AS AN OFFICER OF A CORPORATION,
PLEASE INDICATE YOUR CAPACITY OR FULL TITLE.
IF STOCK IS HELD JOINTLY, EACH JOINT OWNER
SHOULD SIGN.Please sign exactly as your
name or names appear hereon. If signing
as an attorney, executor, administrator,
trustee, guardian, or in some other
representative capacity, or as an officer
of a corporation, please indicate your
capacity or full title. If stock is held
jointly, each joint owner should sign.